Behind the Battle of the south of the Yangtze River: deep-rooted conflict

Pan, Shanghai, August 26, the founder of South Beauty Co., Ltd. (hereinafter referred to as "Qiao Jiangnan"), Zhanglan, said in an interview with global entrepreneur, "the introduction of them (Ding-hui venture) is the biggest mistake of South beauty."　　Zhanglan also said, "she has long wanted to repaying the investment, but the Ding Hui demand double return, the two sides did not talk about."　　Famous catering enterprises and well-known investment institutions of the dispute, an instant attracted countless eyeballs. September 2, near Qiao Jiangnan personage Zheng (alias) told reporters, Ding Hui investment Qiao Jiangnan, Zhanglan and Ding Hui indeed a lot of quarrel, but this quarrel like "Lovers Quarrel".　　He argues that the nature of the conflict between the two sides is that the idea of doing business is different from doing finance.　　After the reporters learned that in 3 years ago, ding-hui investment Qiao Jiangnan, the overall amount is larger, the valuation is relatively high, Ding Hui in the contract buried in a very favorable to their own protective provisions. In fact, this year, Qiao Jiangnan has been in the sprint a A-share but the market may have to go to Hong Kong listing, the two markets have a gap in the average industry price-earnings ratio, then, the south beauty of the valuation will fall?　　If it is, Ding Hui this single investment can also be a sharp decline in profits, and may even be a loss; for Zhanglan, listen to Ding-hui venture investment proposal, to senior executives sold a partial stake, but still cannot be listed in the territory, she felt that she also lost.　　In such circumstances, both sides have grievances, contradictions surfaced.　　Ding Hui investment price: sky-high or reasonable? The time to dial back three years ago, Qiao Jiangnan tried to introduce private equity investment, immediately became the big hot. First of all, its exclusive financial advisers scramble very badly, finally Maple Valley Investment partner Cengyu, borrowed with Zhanglan is the hometown of the favorable. At that time, at least 30 venture capital institutions went to see the South Beauty, and PE investors told reporters, "I heard the value of at least 3 billion, feel too expensive, did not go to see."　　In the end, September 30, 2008, Ding FAI and Zhanglan sat down and signed a capital increase contract. Qiao Jiangnan Industry and commerce data show that in the Ding-hui venture before the Jiangnan, Qiao Jiangnan registered capital of only 14 million yuan, ding-hui injection with 200 million yuan equivalent of the U.S. dollar, occupy 10.526% of the equity. To Zhanglan as the legal representative of Shanghai Qiao Jiangnan Investment Co., Ltd. a single large, accounting for 85.658% shares.　　Another small shareholder holds the remaining stakes. After the dust settles, many PE people ask the Ding Hui and Qiao Jiangnan price, the answer is "no less than 2 billion yuan."　　In this respect, they have said that they can not understand. Ding Hui Venture investment in order to invest in Jiangnan, specifically set up a company, CDH Beauty (HK) 2¥q (hereinafter referred to as Ding Hui Jiangnan), and through it to Qiao Jiangnan Capital and hold the South beauty stake. This company registers in Hong Kong, the legal representative and the actual control person are the gongxin right.　　Because of this, in December, the south beauty of the change to foreign-invested enterprises. Wang into the South Beauty board, and signed an agreement that willHis own in the South beauty of the interior of the matter solely entrusted to the Ding Hui venture Wu.　　The agreement was approved by the south of the river, and was registered in the Business Administration Bureau. Zheng told reporters, that year ding-hui is gongxin right to negotiate with Qiao Jiangnan price, terms. But it has been Wu and Hu Xiaoyun in charge of the project's follow-up, has been that they are communicating with Qiao Jiangnan. So there is no Wang gone, ding-hui venture with Qiao Jiangnan communication is not smooth problem.　　August 31, the reporter called Wu, Wu said he was unwilling to be interviewed on this issue.　　Ding Hui at such a high price to invest in Jiangnan, nature is accompanied by repurchase terms. The contract stipulates: Because the reason of the non-ding-hui side, cause South Qiao Jiangnan can not be listed at the end of 2012, or the actual control of South beauty Jiangnan change, Ding Hui Jiangnan has the right to quit "Qiao Jiangnan."　　The way out of the south beauty election-ding-hui transfer of equity to Zhanglan or Zhanglan identity of the third party, or "through legal procedures to reduce registered capital and to reduce the number of shareholders." This is commonly known as "repurchase".　　According to a law firm partner introduced, the latter plainly is, Zhanglan to want Ding Hui Jiangnan agreed to reduce the registered capital, must prescribe the Ding Hui Jiangnan to accept the price.　　South Beauty's IPO: Trying not to be a family business and many businesses, the introduction of PE or financial investors, the original single equity diversification, to a more market-oriented and more open governance structure, in the face of the public market after the listing of corporate governance rules, Qiao Jiangnan introduced Ding Hui Venture, also has this consideration. Zheng told reporters, Ding Hui settled, "do not interfere with Qiao Jiangnan strategy, not interfere with specific management, but in the preparation of the listing has made a lot of suggestions." In this process, there will be a lot of disputes between the two sides, but on the whole, both sides still have the volume and will give in to each other.　　This is the honeymoon period between Zhanglan and Ding Hui.　　Ding Hui and Qiao Jiangnan in 2008 signed the increase in capital agreement stipulated: the parties also pledged, after the completion of the agreement, "to provide the company with equity incentive proposals, to assist the company to establish a sound legal and effective compensation management system and incentive and binding mechanism." At the end of 2009, the two sides began to do this thing. In early 2010, Zhanglan invited former McKinsey partner Wei as CEO. Wei, according to her former clients, is also a very strong female professional manager.　　You can imagine, Wei from McKinsey to a completely unfamiliar industry, a private enterprise, with the personality of the boss to work together, it takes a lot of courage. Zhanglan gave her courage-March 16, 2010, Wei joined Qiao Jiangnan not long, Zhanglan will South beauty 4.7% of the stake, to 15.08 million of the price transferred to Far Teng Investment Co., Ltd., the company registered in Hong Kong, the legal representative is Wei.　　Ding Hui into the south beauty of about 2 billion of the valuation to calculate, 4.7% of the shares value of 94 million yuan, which is equivalent to Zhanglan a full Wei to let nearly 80 million yuan. Zhanglan also transferred 3.889% of its shares to An Yong, giving a 1.217% stake to the history seagull. Prices are 12.48 million yuan and 3.91 million yuan respectively-the same is the price of friendship.These two people are the top executives of South beauty. At the same time, Ding Hui Jiangnan also made some corresponding transfer, the same is transferred to the above several people.　　After the transfer is completed, Ding Hui Jiangnan holds 9.926% of South Beauty's shares.　　From the Ding Hui Jiangnan and Qiao Jiangnan contract, this series of transfers, most likely is the recommendation of Ding-hui venture. While retaining senior executives with Equity, Zhanglan also introduced a group of professional managers from a number of foreign food chain companies.　　The above measures, you can see Zhanglan resolute to do a standard listed enterprise's determination. But the results were not as smooth as expected. This June, when Wei, the CEO of South Beauty, left, then Zhanglan's son Wang took over Wei's position.　　Then, many of the professional managers who had been dug up from foreign companies also left. In this respect, Zheng told reporters, "Wei with Zhang Total cooperation is also a pleasant, leaving the main is Zhang always or want to make the family business." Wei is not interested in family business. and professional managers leave, one is Qiao Jiangnan and foreign enterprises of the cultural differences is quite large, and secondly is in Qiao Jiangnan is 365 days all year round, at least in the foreign companies will guarantee the double break and holidays. Zheng pointed out that the South beauty of the management of some confusion, behind the reason is that the enterprise's IT management platform is weak, some processes can not be guaranteed through the system, you must rely on people. So the south beauty of more than 50 stores, there are 7000 employees, and Qiao Jiangnan internal personnel is quite complex.　　These professional managers in foreign companies, the former food chain business model is much simpler. "To the standards of listing, Qiao Jiangnan's norms are done enough, but in order to be able to replicate the standard, the South beauty of the norms are not enough." More stores, its flow of information and the complexity of the flow of people will be a geometric growth. You can't imagine that there are 400来 on the menu, you have to manage tens of thousands of things? "Deep-rooted conflict" once, ding-hui and Wang all thought Qiao Jiangnan already very close to a shares. Zheng told reporters that the 2010 Securities and Futures Commission held a meeting to discuss food and beverage enterprises listed 15. Qiao Jiangnan high-rise moved to get the meeting record.　　This record, there are later more commonplace, catering business cash transaction issues. At that time, Qiao Jiangnan executives believe that, in addition to a "public consumption of food and beverage enterprises listed", do not encourage high-end catering enterprises, other is the direction of South Beauty.　　This year, Zhanglan introduced a number of professional managers, complacent ready to go public. 2011, mutation. At the beginning of the year, Qiao Jiangnan has submitted listing materials to the SFC. But 60 days later, the SFC did not give any response, Qiao Jiangnan was hung there. The same fate also has a number of reported listing of several catering enterprises.　　Subsequently, Wang left Ding Hui venture, Huang become the new head of Ding Hui Chong. After a A-share listing is blocked, the choice of Jiangnan and Ding Hui is to go to Hong Kong listing. As we all know, in the same industry, the valuation of Hong Kong stocks is lower than a shares. This month 15th in Hong Kong, the small Southland (01147.HK) as an example, the size of the small Southland and market positioning, and Qiao Jiangnan is quiteClose。　　Small Southland sponsor BofA Merrill Lynch said in its analysis that the small Southland valuation can be between 2.6 billion to 4 billion yuan, the 2012 forecast P/E ratio of 13 to 20 times times, the median price is 16.5 times times.　　The deal was suddenly turned into a bargain for both sides.　　In Hong Kong when the future of the listing, the valuation is not less than 2 billion yuan, Ding hui to calculate, if the 16.5 times times the price-earnings ratio, QIAO Jiangnan 2012 net profit of more than 120 million yuan. For Zhanglan, although only let Ding Hui Chuang cast 10.526% of the equity, and received 200 million yuan of cash. But 2010-year equity incentives are going to zhanglan nearly 9% of the equity, and all are ultra-low prices.　　Since this should be the recommendation of Ding-hui venture, Zhanglan may be blamed and ding-hui venture.　　In a PE partner's view, entrepreneurs and investors must "have the same idea", because if the idea is different, there are conflicts of interest, the two sides can easily talk about collapse. Zheng that the "deep-rooted conflict" between Ding Hui and zhanglan, is precisely the two sides of the appeal and values are different--zhanglan is to do industrial origin, anxious a penny to do two cents, she relies on is twenty thousand or thirty thousand dollars to start, "it really is her a plate of dishes fried out." And Ding Hui is investing, "they ask for multiple returns, more than 10 times times the return in their view is normal".　　This is the way of thinking and the value of the decision, can only be mutually accommodation.　　And at this point, if Zhanglan hope Ding Hui Jiangnan exit, is not an easy thing.　　Agreement in the contract, Zhanglan can be required in the following conditions Ding Hui Jiangnan exit: Because Ding Hui Jiangnan or the cause of the association of Jiangnan can not be listed, or the two sides need to adjust the contents of certain contracts can be listed, Ding Hui Jiangnan or related parties refused to modify, or the actual control of the Jiangnan delta to change.　　The contract also pointed out that the Zhanglan request Ding Hui Jiangnan exit price, the following three ways the highest price shall prevail: through legal procedures to reduce the number of registered capital and shareholders, by the Zhanglan or Zhanglan agreed to buy a third party, the two sides jointly designated by the Third Party Assessment agency assessment of fair value. In summary, Zhanglan can borrow Ding Hui jiangnan actual Control person change, let Ding Hui exit. But the price is the Ding Hui. In this way, when Ding-hui to the sky-high price of Jiangnan, to their own important to stay behind is this repurchase clause. As long as Qiao Jiangnan operation Normal, Ding Hui on an invincible position. Share to: